> So in the example, seller and buyer agree on an escrow agent, seller sends merch, buyer says they got it, transaction completes, but if the buy then discovers that the transaction was fraudulent [1] then there is no way for them to "force" the seller to give them back their money or, in the parlance of payments markets, "reverse" the transaction.
I think you are missing the point since the same is true of credit cards. Credit cards typically freeze the merchant's money until a given chargeback period is over or they require the merchant to always have a minimal amount of money in their bank account. Even a credit card company can't reverse a transaction if the merchant's bank account is empty. At best, they can refund the buyer out of their own pocket.
With Bitcoin "escrowed" transactions, all those schemes are possible. If a buyer wants to be able to reverse a transaction after X days, "chargeback period", he can simply wait X days before he signs the transaction. If he doesn't file a complaint within X days, the escrow is authorized to sign the transaction. Obviously, the "chargeback period" should be agreed upon beforehand between the seller, buyer and escrow.
I can only speak for the experience in US banks, your statement "Even a credit card company can't reverse a transaction if the merchant's bank account is empty or if they do, they do so at their own cost." is not true. Bank accounts can, and do have negative balances[1]. Both the banks and the credit card companies, are in a position to attach liens, refer to collections, and generally destroy the credit worthiness of an individual or a merchant as a result of a dispute between the merchant and a customer, as a result of a chargeback. The bank may be left with an unfunded liability, but they are equipped with a number of legal ways to collect on that from the individual who opened the account. The entire banking industry is built upon the singular question of when and how liability is transferred. Further that structure is backed by the enforcement arms of the government which has licensed the bank. This is underneath the level of what the typical retail banking customer sees or experiences.
You pay someone in cash, and they rip you off, there is no way for you to get your money back except to sue them, send some enforcers around to threaten them, or to steal something of theirs of equal value and sell it. This is exactly the same way BitCoin works. It was designed that way, and it is the very definition of 'irreversible.'
Once a transaction is complete there is no way for it to be reversed without both parties participating in the process. And this is fundamentally different than a banking/payments system which is reversible.
Now it would be possible to create a structure using BitCoin that would have the property of being reversible, which is you bring a third party into the mix, a Bank, and create a series of regulations and rules about how and when transactions are voided and those institutions cause the reversals to actualize in the respective accounts of holders. But that is not how it works today. The current BitCoin payments system is equivalent to a bunch of people walking around with suitcases full of cash.
You can argue it is a 'strength' or you can argue it is a 'weakness' of BitCoin that completed transactions are not reversible, but it is a matter of fact that this is a fundamental difference between BitCoin as a payment mechanism and currency as a payment mechanism.
[1] I once participated in a long running conversation with Bank of America about this when the account in question was mine. Remember, just because you or I might not have any money in our account, it doesn't mean the Bank doesn't have any money it can give to the Credit Card company.
I think you are missing the point since the same is true of credit cards. Credit cards typically freeze the merchant's money until a given chargeback period is over or they require the merchant to always have a minimal amount of money in their bank account. Even a credit card company can't reverse a transaction if the merchant's bank account is empty. At best, they can refund the buyer out of their own pocket.
With Bitcoin "escrowed" transactions, all those schemes are possible. If a buyer wants to be able to reverse a transaction after X days, "chargeback period", he can simply wait X days before he signs the transaction. If he doesn't file a complaint within X days, the escrow is authorized to sign the transaction. Obviously, the "chargeback period" should be agreed upon beforehand between the seller, buyer and escrow.